The outlook isn’t so good for many farmers across America. Although there is always the balancing act between low corn prices hurting grain producers while helping animal feeders, the overall income picture has plunged with record speed.
As a result, I think it is safe to assume there will be some uncomfortable articles to read this winter in pages like these. Some of the words will probably be mine. To temper my own convictions and remind us all, though, it might be helpful to point out ag as a whole, and the ag media in particular, have been relatively ineffective at useful forecasting.
Mostly we tend to blanket the landscape with repetitive cautionary warnings. Working capital! Cost of production! Expense discipline! Clean underwear! Yet many producers already following these rules faithfully are scrambling to turn the bottom line black. We need to know what else we can do.
Dismal Odds. Hence we are drawn toward predictions to steady our nerve and grant us confidence. As economists have shown, we will notice and place greater stock in those forecasts that match our mood or prior inclinations. Predicting is largely unhelpful because most of it doesn’t come true and many events that profoundly affect us go unpredicted. Here are some prophecies we have fretted over for no good reason.
- Farm consolidation didn’t happen exponentially. I fell for this one myself. Throughout my career (1975 on), it was just obvious large farms were going to gobble up small farms. Although consolidation is proceeding, it is not in exponential increase. In fact, economic studies seem to show fewer benefits of scale than imagined. Counterforces such as land ownership patterns, logistical inefficiencies and higher management demands have allowed small and mid-sized farms to compete.
- Brazil didn’t achieve global dominance. Starting in the ‘70s, ag prophets extrapolated from a handful of geographic statistics the image of a future where foreign competition simply overwhelms American producers. To be sure, competition from such countries is formidable, but watching Brazil’s economy circle the drain should remind us that success requires more than arable acres.
- Higher education isn’t required. I do not dispute the value of ag degrees or economic expertise, but education has not been shown to be nearly as important to farm success as being born to, or marrying into, land. As with successful basketball players, you can’t coach height. If you have family with land, your odds of success are much better than the best-prepared landless competitor. Summa cum laude graduates do not dominate the landscape of our competition.
- Non-farmers will not own most of the land. We are now poised to see outside buyers begin to bargain shop, but American farmland doesn’t shift ownership fast or much. During the recent boom, farmers crowded out most other buyers, but as farm incomes turn red, the ratio of farmer ownership will likely dip modestly. These cycles appear shallow at worst.
Analyze Cautiously. There are many other oracular failures. Interest rates have defied soothsaying, for instance. Meanwhile, slow yet obvious trends have been shrugged off even as their effect accumulated into importance: consumer attitudes about food, climate change, consolidation in inputs to quasi-cartels and longer, healthier careers for farmers among them.
Unfulfilled predictions slip by unremarked, like trees that don’t fall in the forest. Yet before they are recognized as false, they alter our emotions and logic, skewing our judgment.
Hunting for accurate predictions has not been a reliable strategy for difficult times. What does seem to help is the ability to recognize patterns in incoming data and respond slightly faster than those around you. To do this requires gaming out possible developments and preparing alternatives. We need shorter reaction times more than sharper foresight.